http://www.theglobeandmail.com/servlet/story/RTGAM.20071223.wabcp1223/BNStory/robNews/
I do check the news, but with a grain of salt added. The general feeling seems to be one of caution, but optimism. You've got some who think we're heading for recession, while others feel it's a good pothole, but by mid-2008, the tire will be fixed and we'll be on our way again. So let's look at some charts...
First of all, here's a 10 year NYSE chart. You can see back in late 1998 there was a bottom. I drew seven fanlines from there. Notice that it didn't make a lower low until 2001. It crossed six fan lines over TWO YEARS of basically flat trading. It's too soon to predict what's coming for 2008 and it's almost foolish to try. Remember, Chris always preaches the importance of synergy. Believe me, I've been watching these 20wk MA's pass over their 40wk counterparts and I would be lying if I said it didn't make every muscle in my body a little tense, but we don't make decisions based on one indicator. Here's a 2 year chart of the NYSE.
You can see the upward reversal starting in June '06 clearly breaking three higher highs. March '07 was a different story. The rule in the book is that three broken trendlines signal a reversal, but in this case, there were not lower lows. It did eventually correct in August dropping even as far as the previous support found in March '07. Since then, we have had lower lows, but even if it did break the 3rd fan line drawn from August '07, it would have to break support at 8800 before I'd worry too much about it (I'd worry just a little). And don't forget, we're still not down to the long-term support either (check the picture of the SPX from my Dec 17th post to see what I'm talking about). On the other hand, it shouldn't really bother us too much because we trade with the trend. We watch the signals and if it goes up, we trade bullish, if it goes down, we trade bearish with a mix of both during the transition. If you look at the 3 fan lines drawn from August '07, you don't need to look at the NASDAQ or S&P because they're virtually identical. 
This is what I see when I look at the major indices. It's got to break one way or the other in the next couple of months OR we'll be trading flat. Notice also the MACD and RSI. This is a weekly chart. You see how the RSI was in overbought territory in May and ever since then it's been recovering/consolidating, same thing with the MACD. It did have a good bull run, maybe it was just time for a slow down. Time will tell, but it's not freakout time yet (I hate to use that as a term because we really want to get away from emotional trading). Let me restate. It's not time to get bearish yet, but it is caution time. I gotta tell ya, I was pretty relieved this week to get the market commentary letter from Chris because I started this "External Market Condition" thread and then found that I couldn't make a decision on it because it wasn't really building or declining and I was afraid maybe I was missing something, but Chris said in his email that the breadth indicators are giving mixed signals and until it gives a more solid consensus of a direction, it's best to sit and wait. Thanks for that Chris. It was funny in my head because I was thinking I needed to find a bullish or bearish position, but I couldn't get around that there were all these contradictory signals until I realized that that WAS the answer for the market condition. Well, that's all for now, sometime soon I will go through these breadth indicators and post my personal take on the market, but its not going to be today. Happy hunting!
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